Jan. 19 (Bloomberg) -- James Cassella says he wants the New
York Giants to win their National Football League conference
championship game against the San Francisco 49ers and then lose
a fight against paying property taxes on their training center.

The mayor of East Rutherford, New Jersey, said he’s a
season-ticket holder rooting for the team to reach and win the
Super Bowl title game. He also wants the club to pay $1.5
million in taxes on the Timex Performance Center in his borough,
saying the team owes more than it’s paying under a deal that
dates back to the 1970s.

“Originally, their offices were in Giants Stadium and that
building was owned by the state of New Jersey,” Cassella said
on Bloomberg Television’s “InBusiness with Margaret Brennan”.
“This was a building that was constructed with private money,
owned by the New York Giants.”

The Moody’s Investor Service ratings firm last week
downgraded $16 million in general obligation debt from the
borough one level to A2 from A1, saying the dispute between the
town, the team and the state entity that owns the land beneath
the stadium has worsened financial operations.

“The negative outlook reflects ongoing litigation related
to the Timex Performance Center’s tax status and the impact on
the budget of non-payment of a material amount of property taxes
for two years,” Moody’s said in a Jan. 13 ratings report,
noting that the facility is the borough’s second-largest
taxpayer by assessed value.

A2 is Moody’s sixth-highest investment grade, and the shift
may result in increased borrowing costs for the town because
investors may see it as less able to repay debts.

East Rutherford Bond

An East Rutherford general-obligation bond maturing in
November 2022 traded on Jan. 6 at an average yield of 3.91
percent, according to data compiled by Bloomberg. That’s 89
basis points higher than when it was traded on Aug. 26. A basis
point is 0.01 percentage point.

Even if the taxes aren’t paid, East Rutherford probably
won’t be in trouble, said Richard Larkin, director of credit
analysis at Herbert J. Sims & Co. in Iselin, New Jersey.

“I don’t get the feeling there’s such a concentration on
this taxpayer that this town is going to founder if they don’t
get the money,” Larkin said in an interview.

Giants spokesman Pat Hanlon declined to comment on the case
in an e-mail, citing pending litigation.

Tax payments on the training center are covered by an
arrangement that dates back to the New Jersey Sports &
Exposition Authority’s construction of the original Giants
Stadium in the 1970s, according to John Samerjan, a spokesman
for NJSEA. The authority, which still owns the property, pays
about $6 million annually to East Rutherford in place of
property taxes for the Meadowlands complex, which also includes
a horse-racing track and the Izod Center.

‘Nothing Changed’

“We believe the statute is clear,” Samerjan said in a
telephone interview yesterday. “The new stadium replaced the
old stadium. The Giants had a practice facility here and offices
here. Now they have a practice facility and offices. Nothing has
changed.”

The town in September 2010 sent the Giants a first $745,000
bill for taxes on the practice complex, which is built near the
new $1.6 billion MetLife Stadium, shared by the Giants and New
York Jets. The facility includes three grass football fields and
an artificial turf field, a field indoors, a 7,500-square-foot
weight room and a football-shaped locker room.

The Giants, owned by the Mara and Tisch families, and the
Jets, owned by Woody Johnson, each borrowed $650 million to help
finance construction of the 82,500-seat stadium. They also sold
personal-seat licenses, one-time fees that give fans the right
to buy season tickets. The teams also borrowed money from the
NFL.

Tax Bills

New Jersey’s average residential property tax bill rose 4.1
percent to $7,576 in 2010 from $7,281 the previous year,
according to the state Department of Community Affairs. East
Rutherford, 13 miles (21 kilometers) west of Manhattan, had a
median household income of $50,163 compared with the U.S. median
of $41,994 in 2000, according to figures posted on the U.S.
Census website.

Cassella said he paid $10,000 for a seat license in the
stadium and he’s still a big fan of the Giants, who beat the
defending Super Bowl-champion Green Bay Packers 37-20 in
Wisconsin last weekend to advance to the conference championship
game against the 49ers in San Francisco on Jan 22.

The stadium is also scheduled to host the NFL’s title game
in 2014, the first time the Super Bowl will be held outdoors in
a cold-weather city.

Cassella said he’s considered taxing the stadium itself,
which is owned by a joint venture between the Giants and Jets,
and is waiting to see how the litigation proceeds before trying
to collect a bill he guesses may be about $12 million a year.

“We’ll see how we make out in this particular court action
that’s going on right now,” he said. “But we also believe the
stadium should be taxed because it was built with private
money.”